The  Southern  Railway 
Belongs  to  the  People 
of  the  South 


An  Address 

Before  the  Chamber  of  Commerce 
of  Chattanooga,  Tennessee,  January  20,  1914. 


By 

FAIRFAX  HARRISON 

President,  Southern  Railway  Company . 


THE  SOUTHERN  RAILWAY  BELONGS  TO  THE  PEOPLE 

OF  THE  SOUTH. 


The  Southern  Railway  System  includes  10,000  miles  of  railroad  on 
which  59,000  officers  and  employees  perform  public  services,  in  return 
for  which  more  than  100  millions  of  annual  revenue  is  collected.  These 
are  big  figures  and,  in  a country  in  which  there  has  always  been  a pride 
in  big  things,  in  which  every  community  has  been  wont  to  boast  of  that 
which  it  has  which  is  the  biggest,  such  a big  thing  as  the  Southern  Rail- 
way System  should  be,  and  I believe  is,  a source  of  pride  to  the  South, 
but  exactly  in  proportion  as  it  is  big  also  in  its  public  service  and  faith- 
ful in  its  public  trust.  The  administration  of  such  a vast  machine, 
affecting,  as  it  does,  the  comfort  and  well  being  of  the  people  of  a large 
territory,  is,  therefore,  itself  a large  public  service.  The  time  has 
passed  when  it  might  be  exploited  for  merely  private  and  selfish  ends. 
The  lawyers  used  to  tell  us  that  a railroad  was  a quasi  public  institu- 
tion, but  today,  happily,  it  might  better  be  described  as  a quasi  private 
institution.  It  is  private  still  in  the  opportunity  it  presents  for  the  exer- 
cise of  individual  initiative  and  competitive  service,  but  in  practically 
every  other  sense  it  is  now  recognized  that  it  is  public. 

It  is  a matter  of  sincere  regret  to  every  railroad  manager  that  rail- 
road securities  are  not  more  generally  held,  directly  and  immediately, 
in  the  communities  which  the  railroads  serve.  The  lack  of  such  holding 
deprives  him  of  a powerful  and  sympathetic  ally  in  the  relation  of  pub- 
lic opinion  to  his  problems.  The  time  was  when  the  railroad  stocks  were 
owned  immediately  at  home,  and  by  the  people  who  were  most  influen- 
tial in  shaping  public  opinion,  but  today,  while  railroad  stocks  are  gen- 
erally held  by  the  same  kind  of  people — by  those  who.  through  the  exer- 
cise of  prudence,  industry  and  courage  have  laid  by  a competence,  and 
by  the  women  and  children  for  whom  they  worked — such  investors  now 
do  not  as  a class  reside  in  the  territories  in  which  they  have  made  their 
investments.  The  explanation  of  this  phenomenon — so  well  known  to 
us  all,  but  still  a phenomenon — is  part  of  the  financial  history  of  the 
United  States,  but  the  fact  has  given  rise  to  a feeling  among  many  of 
those  who  use  the  railroads  daily  and  come  into  immediate  contact 
with  their  managements,  that  the  railroads  belong  to  some  mysterious, 


remote  and  foreign  power,  to  irresponsible  potentates,  who  bear,  in 
popular  imagination,  the  generic  name  of  “Wall  Street.”  We  read  in 
magazines  and  newspapers  of  the  romantic  lives  attributed  to  a few 
individuals  who  are  supposed  to  “control”  the  destinies  of  whole  com- 
munities by  possession  and  exploitation  of  the  instruments  upon  which 
such  communities  depend  for  their  necessary  transportation,  who  “fix” 
rates  and  arbitrarily  determine  conditions  of  service,  and  so  “tax”  the 
people  they  ought  to  serve,  withdrawing  money  earned  in  the  sweat  of 
the  brow  from  the  communities  where  it  is  earned,  to  be  dissipated  at 
a distance  in  extravagant  follies.  Such  a vision  is  not  the  result  of  pure 
imagination — it  has  had  unfortunately  its  foundation  of  justification  in 
a few  conspicuous  instances,  which  leap  to  the  lips  of  every  one  who 
discusses  our  present-day  industrial  problems:  but  every  intelligent  man 
knows  that  it  is  no  longer,  if  it  ever  was,  the  rule. 

In  considering  such  lamentable  individual  cases,  the  public,  when 
forming  its  potent  judgment  on  the  present  situation  of  the  railway  in- 
dustry, must  recognize  them  as  the  unhappy  exceptions  they  are.  To 
him  who  insists  that  the  railroads  should  be  judged  by  their  black  sheep, 
it  is  fair  in  answer  to  invite  attention  to  many  exemplars  of  high-minded 
Integrity  in  the  administration  of  railroad  property.  We  in  the  South 
can  cite  shining  examples  of  such  rectitude.  I may  be  forgiven  a proud 
reference  to  my  late  chief,  William  Wilson  Finley,  whose  opportunities 
•were  not  less  than  those  of  any  of  the  flagrant  individuals  to  whom  allu- 
sion has  been  made,  but  who,  after  years  of  devotion  to  a public  duty 
and  the  practice  of  a large  private  charity,  left  an  estate  the  amount  of 
which,  as  announced  in  the  public  press,  is  at  once  a certificate  of  candid 
character  and  an  illustration  of  just  administration.  One  who  knew 
them  can  add  to  the  same  roll  of  honor  two  more  executives  of  rail- 
roads in  the  South  who  have  recently  gone  to  the  grave — Thomas  M. 
Emerson  and  John  W.  Thomas,  Jr. 

Despite  the  holding  of  railroad  stocks  outside  of  the  territories  the 
railroads  serve,  and  despite  the  aberrations  from  integrity  in  the  admin- 
istration of  some  particular  railroads,  I believe  that  I am  not  claiming 
too  much  when  I assert  that  such  has  been  the  development  of  the  recog- 
nition in  recent  years  of  the  public  nature  and  responsibility  of  the  ad- 
ministration of  the  railroads,  and  such  have  been  the  practical  conse- 
quences of  that  recognition,  that  today  in  every  essential  a railroad  be- 
longs to  the  communities  it  serves. 

In  this  aspect  and  in  a very  real  sense  the  Southern  Railway  be- 


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iongs  to  the  people  of  the  South.  It  is  not  only  their  highway  to  mar- 
ket, but  its  fiscal  operations  are  part  of  the  life  of  the  communities  along 
its  lines. 

At  some  risk  of  trespass  upon  your  attention,  I venture  to  support 
this  claim  with  a brief  argument  from  statistics.  They  record  a condi- 
tion which  is  astonishing  and  I confess  astonished  me  when  I saw  how 
far  they  go  along  the  lines  of  a tendency  which  I knew  to  obtain.  Of 
the  one  hundred  and  three  millions  of  annual  revenue  collected  last  year 
by  the  railways  included  in  the  Southern  Railway  System,  there  was 
immediately  paid  out  again  along  its  lines  at  least  seventy-six  millions, 
an  amount  not  far  short  of  the  total  collections  from  the  people  of  the 
South : for  approximately  twenty-two  millions  of  the  total  revenues  were 
collected  from  people  outside  of  the  Southeastern  States — a fact  not  often 
taken  into  consideration,  the  explanation  of  which  is  that  an  apprecia- 
ble part  of  the  passenger  traffic  of  the  system  consists  of  the  transpor- 
tation of  residents  of  other  localities  traveling  in  the  South,  and,  fur- 
thermore, that  to  a large  extent  freight  charges  on  Southern  products 
shipped  to  other  localities  are  paid  by  the  consignees. 

What  then  becomes  of  these  great  revenues  collected  in  the  South  ? 
Are  they  hurried  away  to  some  cavern  in  Wall  Street?  No.  The  fact 
is  that  all  the  moneys  collected  in  the  South  are  deposited  in  Southern 
banks  which  are  drawn  upon  from  time  to  time  only  as  funds  are  needed 
for  proper  fiscal  purposes.  The  funds  of  the  system  thus  become  an 
important  factor  in  strengthening  the  banks  of  the  territory,  and  so  are 
at  all  times  at  the  service  of  the  Southern  people. 

I have  said  that  these  funds  are  withdrawn  from  Southern  banks 
from  time  to  time  only  as  needed  for  proper  fiscal  purposes,  but  even 
in  that  operation,  to  a large  extent,  the  moneys  collected  for  transpor- 
tation service  on  our  lines  are  not  withdrawn  at  all  from  the  South- 
ern communities  in  which  they  are  collected.  This  can  be  demonstrated 
by  an  analysis  of  Southern  Railway  expenditures  for  the  last  fiscal 
year.  Such  analysis  shows  that,  of  every  dollar  disbursed,  41.71  cents 
went  to  the  payment  of  wages,  substantially  all  of  which  are  paid  along 
the  line  of  the  road,  and  so  remain  in  Southern  banks,  a disbursement 
which,  for  the  Southern  Railway  proper,  averages  about  two  million 
dollars  a month.  The  purchase  of  materials  and  supplies  used  23.30 
cents,  and,  under  our  policy  of  buying  as  far  as  practicable  from  South- 
ern people,  19.12  cents  of  this  was  expended  in  the  South  and  only  4.18 
cents  in  other  localities.  Miscellaneous  operating  expenses  required  6.09 


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cents,  all  spent  in  the  South.  Taxes,  all  paid  in  the  South,  required 
3.65  cents.  Interest,  rentals  and  other  miscellaneous  payments  accounted 
for  20.83  cents,  and  the  holders  of  the  Company’s  preferred  stock  re- 
ceived 4.42  cents.  It  is  unfortunately  impracticable  to  determine  the 
proportion  of  interest  and  dividends  paid  to  Southern  owners  of  South- 
ern Railway  securities.  I wish  it  was  all  paid  to  Southern  people : but, 
leaving  these  entirely  out  of  account,  it  is  seen  that  at  least  70.57 
cents  out  of  every  dollar  expended  by  the  Southern  Railway  remains  in 
or  is  brought  into  the  South.  It  may  be  added  that  these  figures  do  not 
take  account  of  expenditures  for  additions  and  betterments  amounting 
last  year  to  three  millions  and  a half  and  in  ten  years  to  twenty-seven 
millions  of  which  the  major  part,  expended  on  roadway  and  structures, 
was  practically  all  paid  out  along  the  line  of  the  road.  We  may  then 
take  it  as  established  that  what  the  Southern  people  pay  the  Southern 
Railway  lines  for  transportation  remains  a part  of  the  working  capital  of 
the  Southern  people:  but  it  is  interesting  to  pursue  the  thought  a step 
further  to  a realization  of  what  these  disbursements  by  the  Southern 
Railway  in  the  South  mean  in  the  life  and  growth  of  the  Southern  peo- 
ple. Of  the  total  of  seventy-six  millions  paid  out  along  the  Southern 
Railway  lines  last  year  approximately  forty-three  million  dollars  went  to 
the  army  of  59,000  employees  and  thus,  on  the  conventional  basis  of 
five  to  a family,  directly  supported  about  295,000  Southern  people,  or 
about  six  and  one-half  times  the  population  of  Chattanooga  at  the  date 
of  the  last  census. 

I have  spoken  of  our  preferred  stockholders,  but  the  real  pre- 
ferred stockholders  of  the  Southern  Railway  System,  in  the  matter  of 
priority  of  claim,  are  the  political  governments  of  the  States,  counties, 
and  cities  along  its  lines.  Their  claim  upon  railroad  revenues  comes 
ahead  even  of  that  of  employees,  and  they  took  $3,743,704.39  in  the  last 
fiscal  year.  It  is  hard  to  grasp  the  significance  of  figures  as  large  as 
this : what  our  tax  payments  really  mean  to  the  communities  along  our 
lines  can  be  better  understood  by  an  illustrative  analysis  of  our  pay- 
ments on  account  of  school  taxes  and  road  and  bridge  taxes  in  the 
Southern  States.  In  1912,  our  school  taxes  in  these  States  amounted 
to  something  over  $800,000,  or  an  average  of  twenty-eight  hundred  dol- 
lars for  each  county  traversed  by  our  lines.  At  the  average  annual 
compensation  of  school  teachers  in  the  Southern  States,  as  reported  by 
the  United  States  Bureau  of  Education,  this  would  more  than  pay  for 
ten  teachers  in  each  county.  It  represents  $2.64  out  of  every  $100  of 


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school  taxes  paid  in  these  States  and  amounts  to  fifteen  dollars  for  each 
school  building  in  the  States  traversed  by  our  lines.  Every  dollar  paid 
to  the  Southern  Railway  for  transportation  charges  thus  includes  a 
substantial  contribution  to  the  maintenance  of  the  system  of  public  edu- 
cation in  the  South. 

Payments  by  the  Southern  Railway  System  in  the  same  year  of 
taxes  directly  assessed  for  public  roads  and  bridges  amounted  to  $447,- 
966.63,  or  an  average  of  $1,571.81  for  each  county  along  our  lines. 
Every  dollar  paid  to  the  Southern  Railway  for  transportation  charges 
thus  includes  also  a substantial  contribution  to  the  maintenance  of  the 
public  highways  of  the  South  and  is  an  indirect  but  none  the  less  real 
public  support  of  the  progressive  movement  for  good  and  better  roads. 

I have  referred  to  the  impracticability  of  determining  the  amounts 
of  interest  and  dividends  paid  to  holders  of  securities  living  along  the 
line  of  the  road.  We  know,  however,  that  a large  percentage  of  our 
population  have  a very  real  though  indirect  personal  interest  in  these 
securities  even  though  they  may  never  have  seen  a railroad  bond  or 
stock  certificate.  There  are  few  families  in  the  South  who  do  not  hold 
an  insurance  policy  of  some  sort : either  an  assurance  on  life  or  against 
the  risk  of  fire.  The  invested  funds  of  the  great  insurance  companies 
are,  therefore,  matter  of  vital  concern  to  the  Southern  people  and,  in 
large  measure,  are  their  own  assets  held  in  trust  for  their  benefit.  We 
find  that  the  chief  insurance  companies  report  their  holding  of  securi- 
ties of  the  Southern  Railway  System,  including  terminal  bonds  on  which 
the  Southern  is  a joint  guarantor  aggregating  more  than  eighty  million 
dollars.  In  that  great  fund,  the  integrity  of  which  depends  upon  the 
continued  solvency  of  the  Southern  Railway  lines,  the  Southern  people 
have  a vital  proprietory  interest;  an  interest  which,  as  they  realize  it, 
should  be  to  them  a constant  spur  to  protect  themselves  by  maintaining, 
as  they  can  and  will,  the  basis  of  Southern  Railway  credit. 

I assert  with  confidence  that  the  facts  to  which  I have  called  your 
attention  are  full  warrant  for  the  claim  that  in  a very  real  sense  the 
Southern  Railway  belor  gs  to  the  people  of  the  South : so  much  so  that 
its  annual  reports  mignt  more  properly  be  addressed  “To  the  People 
of  the  South”  to  advise  you  of  the  results  of  the  management  of  your 
property,  for  today  it  belongs  more  to  you  than  it  does  to  the  stock- 
holders. More  than  this,  its  management  is  and  always  has  been  devoted 
to  the  interests  of  the  South.  Its  officers  are  mostly  Southern-born  men 
and  those  who  were  not  born  in  the  South  have  been  here  long  enough 


to  become  identified  with  our  interests,  our  peculiarities,  our  responsi- 
bilities, our  prejudices,  and  our  aspirations  as  a people:  they  talk  the 
same  language  as  the  people  of  the  South.  I look  forward  to  the  time 
when  there  may  be  more  Southern  men  sitting  on  our  Board  of  Direc- 
tors, where  I know  that  they  will  be  welcome. 

As  an  organization  then,  the  Southern  Railway,  with  full  apprecia- 
tion of,  and  acquiescence  in,  the  present  tendency  of  public  sentiment  as 
to  what  a railway  is  and  should  be,  stands  pledged  to  the  Southern  peo- 
ple, and  is  proud  to  declare  itself  one  of  their  own  institutions.  As 
such  it  invites  the  Southern  people  to  help  it  to  become  more  and  more 
their  efficient  servant  and  at  the  same  time  the  object  of  their  pride  and 
affection.  They  need  have  no  fear  of  its  future  if  it  has  their  confi- 
dence. 

I trust  you  will  permit  me  to  take  this  occasion  to  say  finally  a 
word  of  a personal  nature:  I believe  in  the  South  and  our  Southern 
people  with  all  my  heart  and  soul.  I have  given  most  of  the  years  of 
my  manhood  to  an  earnest,  though  a subordinate,  part  in  an  effort  to 
realize  a high  purpose  of  promoting  the  regeneration,  through  industry, 
of  the  prosperity  of  this  our  beloved  motherland.  I have  not  known  in 
my  own  experience  the  horrors  either  of  the  military  conflict  which 
left  our  people  prostrate,  or  of  the  drear  years  of  political  disability 
and  atrophied  ambition  which  followed  that  great  war  between  the 
States,  in  one  of  the  chief  theaters  of  which  we  are  tonight : but  I know 
the  bitterness  of  these  things  in  the  tradition  of  my  immediate  family, 
and  I have  learned  from  my  parents  that  there  can  be  no  higher  aspira- 
tion than  to  be  a part  in  the  realization  of  the  ideals  of  our  Southern 
people.  Facing  the  future,  I have  then  dedicated  my  life  to  that  duty 
and  to  identification  with  the  Southern  people.  Many  others  have  done 
and  are  doing  this  and  I am  proud  to  be  of  the  company  which  has  ac- 
complished, through  co-operation  and  sustained  effort,  so  much  in  the 
last  quarter  of  a century. 

I am  humbly  grateful  for  the  welcome  the  South  has  given  me  to 
my  new  opportunity  for  its  service.  It  has  been  such  a welcome  as  you 
have  given  me  tonight,  cordial  and  with  every  evidence  of  good  will. 
My  hope  is  to  justify  this  to  those  who  allow  me  their  confidence,  who 
are  willing  to  believe  that  if  we  sometimes  fail  it  will  not  be  through 
lack  of  good  intention  or  desire  to  do  our  duty  as  we  conceive  it.  I have 
no  sense  of  personal  elation  in  the  realization  today  of  an  ambition  cher- 
ished ever  since  I entered  the  service  of  the  Southern  Railway  Company 


6 


seventeen  years  ago.  I feel  most  a sobering  sense  of  a heavy  responsi- 
bility, but  I do  not  fear  the  event.  I have  served  under  two  great  men, 
Samuel  Spencer  and  William  Wilson  Finley,  both  men  of  action,  eager 
to  accomplish,  conscious  always  of  the  imperious  summons  of  today,  and 
of  the  warning  of  Ecclesiastes : “Whatsoever  thy  hand  findeth  to  do, 
do  it  with  thy  might.”  I have  known  that  before  all  they  were  patriotic 
men,  faithful  to  the  South,  and  with  their  example  and  their  ideals  be- 
fore me  my  hope  now  is  so  to  carry  on  their  work  as  to  gain  the  kind  of 
public  esteem  they  earned  and  to  aid  in  building  for  the  future,  as  they 
built,  not  only  the  Southern  Railway  but  the  South  itself.  In  this  high 
endeavor  I am  one  of  you,  my  fellow  countrymen,  who  are  similarly 
engaged,  and  I appeal  to  you  as  co-workers  for  aid  and  co-operation. 


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I'  I 


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